Redhawk Resources, Inc.

Redhawk Resources, Inc.

April 12, 2010 18:28 ET

Redhawk Reports Results of Copper Creek Project Scoping Study Update

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 12, 2010) - Redhawk Resources, Inc. ("Redhawk" or the "Company") (TSX VENTURE:RDK)(FRANKFURT:QF7) Redhawk Resources, Inc. (the "company" or "Redhawk") through its wholly owned subsidiary, Redhawk Copper, Inc., is pleased to announce the results of an update to the Scoping Study (Preliminary Assessment) originally released on February 27, 2009 on its wholly owned Copper Creek Project located in the Bunker Hill Mining District, Pinal County, Arizona. The updated Scoping Study uses a baseline copper price of $2.75 per pound versus $2.25 per pound in the initial Scoping Study. The Scoping Study was prepared by KD Engineering of Tucson, Arizona under the direction of Joseph M. Keane, P. Eng., of KD Engineering. The Scoping Study was prepared pursuant to National Instrument 43-101, Standards for Disclosure for Mineral Projects of the Canadian Securities Administrators. The Scoping Study is based upon NI 43-101 compliant resource estimates prepared by Independent Mining Consultants ("IMC") of Tucson, Arizona and released on 29 October, 2008. Golder Associates, Milne & Associates, WestLand Resources, Call & Nicholas Engineers, and METCON, all well recognized consulting firms, contributed to the Scoping Study authored by KD Engineering. All dollar numbers in this news release and in the updated Scoping Study are in $US.

The Scoping Study financial analysis is pre-tax and based upon an initial mining rate of 2,500 tons per day in near surface breccia resources and increasing to 10,000 tons per day as the deeper porphyry resources get developed. Using a copper price of $2.75 per pound, $15.00 per pound molybdenum, $750 per troy ounce gold, and $12.00 per troy ounce silver, the economic analysis results in a pre-tax IRR of 20.4 percent. The pre-tax NPV is $539.1 million at a 5 percent discount rate, $350.0 million at a 7.5 percent discount rate, and $222.7 million at a 10 percent discount rate. Payback of capital is achieved after 6.9 years of production. At a zero discount rate a NPV of zero is produced at a $1.77 per pound copper price (break even copper price). With a 7.5 percent discount rate, a NPV of zero is produced at a copper price of $2.05 per pound.

Discount Rate                      Pre-tax NPV
5%                      $539.1 million
7.5%                      $350.0 million
10%                      $222.7 million

A summary of the inputs, methodology, and results of the Scoping Study are discussed below. For complete information on the Scoping Study inputs, methodology, and results, the reader is referred to the complete Scoping Study that will be posted on SEDAR.

The Copper Creek property consists of more than 5,000 acres (2,030 hectares) in one contiguous block on the west flank of the Galiuro Mountains, approximately 75 miles (121 km) north east of Tucson, Arizona. The Copper Creek resources consist of numerous "higher grade" breccia (Bx) hosted deposits and deeper "porphyry like" deposits of Laramide age and situated within the southwest porphyry copper province of North America. The deposits host significant copper mineralization, many with strong molybdenum contribution, and by-product silver and gold.

IMC estimated Measured, Indicated, and Inferred Resources of the Copper Creek project at cutoff grades of 0.75% copper equivalent ("CuEq") in the breccia deposits and 0.60% CuEq in the porphyry deposits is as follows:

Category Tons (short) Cu% Mo% Au opt Ag opt Pounds (Cu)
Measured Bx 5,898,000 1.41 0.013 0.002 0.128 166,324,000
Indicated Bx 1,411,000 1.76 0.034 0.003 0.106 49,385,000
Keel 20,025,000 0.90 0.022 not est. not est. 360,450,000
Inferred Bx 2,091,000 1.37 0.027 0.008 0.063 57,293,000
Keel/AE 157,126,000 0.75 0.016 not est. not est. 2,356,890,000

[% = percent; opt = troy ounces per short ton; not est. = not estimated in resource due to insufficient number of assays from historical data; CuEq = Cu + 6.67 x Mo + 13.33 x Au + 0.27 x Ag as this reflects metal recovery and production costs]

The Scoping Study base case is initial mining from the surface and near surface breccia resources at a rate of 2,500 tons per day ("TPD") and then increasing to 10,000 TPD when the Keel and American Eagle ("AE") porphyry deposits are developed. Mining in the breccias is anticipated to be a combination of blast hole stoping with fill and mechanized cut and fill methods. Mining in the Keel and AE is anticipated to be post-pillar room and pillar with engineered fill. Based upon the above mining rates and methods, cutoff grades of each of the deposits were calculated using $2.75/pound (lb) copper, $15.00/lb molybdenum, $750/troy ounce (oz) gold and $12.00/troy oz silver. The breakeven cutoff grades used were 0.90% CuEq for the Childs, Prince, and Globe breccia deposits; 1.10% CuEq for the Mammoth and Old Reliable breccia deposits; and 0.70% CuEq for the Keel and American Eagle deposits. Indicated economic resources are shown in the table below:

Resources at Breakeven Cutoff Grade for Mine Planning

Deposit Tons (short) Cu% Mo% Au opt Ag opt
Childs 1,355,000 1.96 0.061 0.006 0.172
Prince 433,000 2.13 0.005 0.001 0.083
Globe 92,000 1.27 0.003 0.000 0.048
Mammoth 2,213,000 1.80 0.001 0.001 0.160
Old Reliable 519,000 1.58 0.014 0.003 0.080
Subtotal Breccias 4,612,000 1.87 0.021 0.003 0.145
Keel (Ind.) 17,188,000 0.95 0.023 not est. not est.
Keel (Inf.) 31,738,000 0.91 0.030 not est. not est.
AE (Inf.) 64,200,000 0.83 0.015 not est. not est.
Subtotal Porphyry 113,126,000 0.87 0.020 not est. not est.
Grand Total 117,738,000 0.91 0.020    

At a mill feed rate of 3.6 million tons per year (10,000 TPD) this would indicate a mine life of approaching 30 years, depending upon mining recovery rates.

A higher cutoff grade than the breakeven cutoff grade of 0.70% CuEq, (shown for the Keel and American Eagle deposits in the table above), was used as a base case in the initial years of mining. At a 0.90% CuEq cutoff grade, the resulting indicated and inferred tons and grades for both deposits is shown in the table below:

Mine Plan Resources for Keel and American Eagle at 0.90 CuEq Cutoff

Deposit Tons (short) Cu% Mo% Au opt Ag opt
Keel (Ind. + Inf.) 26,450,000 1.12 0.039 not est. not est.
AE (Inf.) 27,463,000 1.01 0.017 not est. not est.
Grand Total 53,913,000 1.11 0.028 not est. not est.

The smaller tonnage is still generally contained in discreet blocks, or lenses, that lend themselves to good stoping shapes for efficient mining. At the 3.6 million tons per year mill feed rate, the resource would indicate about 10.5 years of mine life using a 70% mining recovery. As the first 3 to 4 years of production is from the breccias, the remaining years of production are from the Keel and AE resources that are above 0.80% CuEq cutoff to complete a minimum mine life of 20 years. At a cutoff grade of 0.80% CuEq, an additional 23 million tons, at an average grade of 0.97% copper and 0.024% molybdenum, would become available extending the mine life to over 21 years.

Capital expenditures in the Scoping Study are estimated as shown below:

Mine Development $268,159,000
Tailings Facility $26,455,000
Environmental $2,029,000
Plant and Equipment $92,454,000
TOTAL MINE AND MILL $389,097,000

Operating costs used in the Scoping Study are shown below:

Direct Mine Operating Costs              US$ per ton
Prince 31.06
Globe 31.06
Childs 31.06
Mammoth 35.32
Old Reliable 35.32
Keel 18.02
American Eagle 18.02
Process Costs              $ per ton
2,500 tpd 14.31
10,000 tpd 9.15

Estimated process recoveries used in the Scoping Study are shown below:

Copper - (Childs, Mammoth, Globe, OR, Prince) 95%
Copper - Keel, AE 90%
Molybdenum 80%
Gold 40%
Silver 90%

Joe Sandberg, President of Redhawk, commented: "The Updated Scoping Study is a thorough and conservative baseline starting point to evaluate the economics of the Copper Creek project in light of current commodity prices. We are confident that improvements can be made to the project that will result in better economics than demonstrated in the baseline case and we are currently focused on achieving this goal."

R. Joe Sandberg, CPG, President and Director of Redhawk Resources is the qualified person within the meaning of N1 43-101 who supervised the preparation of the information that forms the basis of this news release.

About Redhawk

Redhawk is a Canadian-based resource exploration and development company with primary focus on the accelerated development of its advanced stage Copper Creek copper-molybdenum project in San Manuel, Arizona. The Company also has a gold/silver property in Nevada.

The 100% owned Copper Creek property consists of approximately seven square miles of almost totally contiguous patented and unpatented mining claims and state prospecting permits, located about 70 miles northeast of Tucson, Arizona and about 15 miles east of San Manuel. The property is in the prolific southwest US porphyry copper belt at the projected intersection of a major northwest belt of porphyry copper deposits or mines (Ray, Miami/Globe, Superior/Resolution, Johnson Camp) and a major east-northeast belt of porphyry deposits (San Manuel/Kalamazoo, Silver Bell, Lakeshore, Safford, Morenci). The property is within sight of the former BHP Kalamazoo/San Manuel copper smelter and mine and within 30 miles of an existing operating copper smelter. The area is a mining friendly and politically secure location with excellent and readily accessible infrastructure.


"R. Joe Sandberg"

R. Joe Sandberg, President

The forward-looking information contained in this press release is made as of the date of this press release and, except as required by applicable law, Redhawk does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise. By its very nature, such forward-looking information requires Redhawk to make assumptions that may not materialize or that may not be accurate. This forward-looking information is subject to known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such information.

Neither TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.

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